Total Posts:3|Showing Posts:1-3
Jump to topic:

Lehman Brothers

MorganLad28
Posts: 2
Add as Friend
Challenge to a Debate
Send a Message
7/21/2015 12:28:33 PM
Posted: 1 year ago
Hi debate.org,

I have a question which I hope people more experienced in economics can help me with. So basically, you have full control at Lehman Brothers, and it is March 2008 (6 months before they went bankrupt). You can do anything possible within the company and you need to stop it going bankrupt. What sort of measures do you take for the same?
MorganLad28
Posts: 2
Add as Friend
Challenge to a Debate
Send a Message
7/22/2015 7:46:47 AM
Posted: 1 year ago
At 7/21/2015 12:28:33 PM, MorganLad28 wrote:
Hi debate.org,

I have a question which I hope people more experienced in economics can help me with. So basically, you have full control at Lehman Brothers, and it is March 2008 (6 months before they went bankrupt). You can do anything possible within the company and you need to stop it going bankrupt. What sort of measures do you take for the same?

Anyone with any help?
Porkloin
Posts: 53
Add as Friend
Challenge to a Debate
Send a Message
7/22/2015 2:13:23 PM
Posted: 1 year ago
Not sure what happened - had a big post in reply, but it seems to have vanished.

6 month prior to bankruptcy, I don't think there was anything to be done, other than hope for a gov't bailout or for another company to buy Lehman. In reality, neither of those happened, and down Lehman went. I guess the gov't didn't consider it "too big to fail."

Lehman, at the peak, was leveraged 44 to 1. Ridiculous for a "bank." Only takes a 2.27% move in value for the underlying securities on such positions, and you've no value in the position.

With only 6 months to go, I don't think there could be any true selling off of the positions, of unwinding the unwise holdings of commercial real estate, subprime mortgages, and derivatives (credit default swaps and collateralised debt obligations).

Who wanted them, now that things were headed down? Only thing left to do is lobby the gov't harder, hoping to get bailed out, or find some way to persuade somebody to buy you.